ANNAPOLIS, Maryland—Chris Hemmeter has seen the future of the hotel industry. And that future is bringing seismic shifts in the world of distribution.
As managing director of Quest Hospitality Ventures, a venture capital firm focused on hospitality technology, he has reviewed more than 800 investment opportunities in some of the most innovative entrepreneurial startups since 2009. His position puts him on the bleeding edge, reviewing new trends and ideas before they make the slightest ripple in the mass market.
And from what he’s seen, hoteliers need to study up.
“Hotel owners should be students in what’s happening in travel ecommerce, in distribution generally and in mobile and social,” he said. “There are so many things happening around travel in those categories that affect the way that hotels market themselves and ultimately manage their inventory, their pricing, everything about the core of their business.
Chris Hemmeter, Quest Hospitality Ventures
“I think that the old model of the big (online travel agencies) versus brand.com is changing radically and is going to continue to change,” Hemmeter continued. “I think it’s very, very important for hotel owners to be students of those trends.”
Quest’s investments reflect that evolution of distribution. For example, the venture fund has a stake in Hipmunk, which aims to streamline the booking process by presenting hotels on a map according to “Ecstasy,” or how enjoyable the overall guest experience (e.g. price, location, ratings) will be. The venture fund has also invested in Adara, which has built more than 200 million traveler profiles by compiling booking and search behavior from travel suppliers, as well as newBrandAnalytics, which processes guest comments and reviews across numerous online platforms to provide hoteliers with a better satisfaction insight and completive intelligence.
Quest has made eight investments since its founding in 2009.
“There’s hype, there’s trends, and there’s real market movements,” Hemmeter said.
“What really defines a good opportunity for us is a company or technology that is addressing a large market opportunity,” he said. “More importantly than it being a current large market opportunity, it needs to be a market opportunity that is expanding. In some cases it may be a new market that we predict. That’s a key factor.”
He highlighted distribution, mobile, social media, guestroom entertainment and green tech as some areas with clearly defined, growing needs.
Beginning a new venture
Hemmeter’s forward-looking perspective will receive its own infusion of capital with the forming of Thayer Ventures, the successor of Quest Hospitality Ventures. The new private-equity sponsor is an affiliation between Quest and Thayer Lodging Group, the Annapolis, Maryland-based hotel investment company.
Thayer Ventures will focus on sponsoring investment funds, which will invest in emerging technology companies in the global hospitality industry. Part of Thayer Lodging Group’s family of funds, Thayer Ventures will continue to be managed by Hemmeter and the three other principals of Quest Hospitality Ventures and will begin making investments in 2013 from its new investment vehicles.
“Thayer has had a long history of being an early adopter for new technology platforms in the hospitality industry,” said George Dabney, managing director of Thayer Lodging Group, which owns 17 hotels comprising 4,158 rooms.
Partnering on Thayer Ventures will give the hotel investment company a leg up on new innovations to drive profitability in its portfolio, he said.
The focus will be more or less the same, Hemmeter said. Thayer Ventures will look at innovative startups in the realms of distribution, ecommerce, mobile and social media.
Finding those worthwhile investments will be easier than it was in the past, he said.
“Entrepreneurs are sophisticated. They are pretty good at finding the right sources of capital for their businesses,” he said, adding five to six deals cross his desk every day.
Sifting through such volume can prove challenging, however. Again, Hemmeter will focus first on market need. Another key criteria: the team.
Whereas in the past tech startups were dominated by college-aged whiz kids, today the landscape is skewing older. More and more entrepreneurs are silver-haired baby boomers who have left stable jobs behind to build something of their own, Hemmeter said.
“Even though everybody likes to talk about Mark Zuckerberg and all these other heroes of the day, teams are more seasoned,” he said. “There are more quality startups being launched by executives in their (middle) and even late career, which is very interesting.”